November 1, 2002
Who would have thought that finance ministers and central bank governors of the developed world, and leaders of the International Monetary Fund would have devoted a significant portion of their annual meeting in September to the esoteric subject of bond documentation? The global economic environment is the weakest it has been in a decade, there is a growing gap in development levels worldwide and there is a global war against terrorism. Yet the one-page G-10 communiqué issued at the meeting did not mention these subjects. Instead its longest, central paragraph addressed collective action clauses.
The Argentine government's debt default, followed by
trouble in other deeply indebted countries, has made the debate over how to handle sovereign debt crises one of the most important topics in the world capital markets. Arnold & Porter's Whitney Debevoise describes how the official sector, investors have positioned themselves on the statutory and contractual approaches. In the end, both will require adjustments.